El Salvador became the first country in the world to make the bitcoin cryptocurrency a legal tender in the Central America country after its Congress on June 9 approved a bill to approve it.
Its adoption as legal tender will go into law in 90 days.
President Nayib Bukele had announced that he would send a bill to Congress next week to make the bitcoin cryptocurrency a legal tender in the Central American country, in what will be a world first, IANS said.
Bukele announced this in a recorded message played at a Bitcoin conference in Miami on Saturday, PTI said. The 39-year-old president, who has maintained approval ratings above 90 percent and made Twitter his preferred way of communicating, characterized it as an idea that could help El Salvador move forward.
He reasoned that: "In the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy and in the medium and long term we hope that this small decision can help us push humanity at least a tiny bit into the right direction.”
El Salvador has two official forms of money as legal tender
El Salvador has two official forms of money in its local system already – locally issued colons and US dollars. According to CoinDesk, though both are good for all debts, public and private, one local bitcoiner told CoinDesk, Salvadorans use dollars for commerce and colons as 'table ornaments.'
The US dollar is El Salvador's official currency. About one quarter of El Salvador's citizens live in the United States and last year, despite the pandemic, they sent home more than $6 billion in remittances.
Bukele's New Ideas party holds a supermajority in the new congress seated May 1, giving any legislative proposal from the president a strong likelihood of passage.
Bukele in subsequent messages on Twitter noted that Bitcoin could be “the fastest growing way to transfer 6 billion dollars a year in remittances.” He said that a big chunk of those money transfers were currently lost to intermediaries and with Bitcoin more than a million low-income families could benefit.
He also said 70 percent of El Salvador's population does not have a bank account and works in the informal economy. Bitcoin could improve financial inclusion, he said.
Riding his high popularity and his party's dominance performance in the February b. 28 elections, Bukele has concentrated power. His party''s supermajority in congress ousted the justices of the Constitutional Chamber of the Supreme Court May 1. They then replaced the attorney general.
They had been critical of some of Bukele's more drastic measures during the pandemic, including a mandatory stay-at-home order and containment centers where those caught violating the policy were detained.
While enjoying a positive relationship with former US President Donald Trump, Bukele has had a much more tense relationship with the administration of President Joe Biden.
Last month, the White House Special Envoy for the Northern Triangle Ricardo Zúñiga said during a visit to El Salvador that the US government would like to see El Salvador reverse the moves against the court and the attorney general. Bukele said that would not happen.
Bukele's concentration of power, attacks on critics and open disdain for checks on his power have raised concerns about El Salvador's path. However, Bukele has a wide base of support in part due to the utter failure of the country's traditional parties who ruled during the past 30 years to improve people''s lives and to his ability to provide short-term benefits.
Bukele has been praised for aggressively obtaining COVID-19 vaccines and running an efficient vaccination programme far more successful than El Salvador's neighbours.
(With inputs from agencies)